1. THE RELATIONSHIPS BETWEEN
MARKET ORIENTATION, FIRM
INNOVATIVENESS AND
INNOVATION PERFORMANCE
By
Sabri Erdil,Turkey
Presented by:
Muhammad Awais
Presented to:
Dr.Muhammad
Shafique

2. INTRODUCTION
• Key terms & concepts: market orientation, firm
innovativeness, innovation performance.
•
•
Market orientation: is defined as the organization-wide generation of market
intelligence pertaining to current and future customer needs, dissemination of
intelligence across departments and organization-wide responsiveness to it.
(Matsuno et al., 2003)
Market orientation: Is define in terms of three dimensions;
 The generation of market information about needs of customers and external
environmental factors.
 The dissemination of such information among organizational functions.
 The development and implementation of strategies in response to the
information.
These elements include continuous and systematic information gathering regarding
customers and competitors, cross-functional sharing of information and
coordination of activities, and responsiveness to changing market needs.
(Martin and Grbac, 2003).

3. MARKET ORIENTATION & FIRM
PERFORMANCE
•
Market orientation is significantly important in enabling firms to understand the
market place and develop appropriate product and service strategies to meet
customer needs and requirements (Liu et al, 2002).
• The literature concerning the marketing concept has assumed that the
implementation of the market orientation would lead to superior organizational
performance. (Piercy et al, 2002).
• The linkage between market orientation and performance depend upon the
environmental characteristics of the organization. Basically it is to be categorized
into three dimensions:
 Market turbulence (the rate of change in the composition of customers and their
preferences),
 Competitive intensity and
 Technological turbulence.
Organizations that work with rapidly changing technologies may be able to obtain a
competitive advantage through technological innovation together with the market
orientation.

4. Collection and Use of Market
Information
• Collection and use of market information enabled by information
systems is broadly considered to be a competitive weapon to cope
with uncertain and volatile environments. Companies can deal with
uncertainty by increasing their information processing capability
and by creating inter organizational links between customers and
Suppliers. Knowledge-based resources information gathering
include specific technical and creative skills as well as integrative
and coordinative skills (Mata et al, 1995).
• Firm innovativeness described by the development and marketing of
innovations in order to involve market, technology and competitor
uncertainty. This means need for new information, technical changes
and new organizational arrangements.
• The more informed individuals engage the more they involved in
problem solving discussions and create significant number of
innovation which is associated with the ability to access knowledge
from outside the boundaries of the firm and the ability to integrate
knowledge across departmental boundaries within the firm.

5. FIRM INNOVATIVENESS
The innovativeness of a new product and firm innovation capability is
important for several reasons. Innovation products present opportunities for
firms in terms of growth and expansion into new areas as well as allow firms
to gain competitive advantage.
• Market orientation and entrepreneurial drive provides cultural foundation
for organizational learning which enables an organization to achieve a
higher level of performance and better customer value (Liu et al, 2002).
• Firm innovativeness consists of different dimensions; product
innovativeness examined in the literature both from customers’ perspective
and firm’s perspective; innovation in production processes
work
organization, and human resource management practices. A product or a
process orientation of firm innovativeness will result in success if the firm
undertakes actions valued by the market. Product oriented firms need to be
competent in understanding its customers and ensure that customers
recognize the production possibilities facilitated by its processes.

6. MARKET ORIENTATION AND FIRM
INNOVATIVENESS
• Market orientation is one of the core aspects of strategic marketing together
with firm performance, new product performance and firm innovativeness.
(Gima, 1995; Gatignon and Xurebeb, 1997; Bear and Frese, 2002;
Calontone et al, 2002).
• Market orientation have a direct impact on performance and indirect effects
may exist too.
• R&D, market orientation and the interaction between them drive innovation
and firm innovativeness (willingness and capacity to innovate) which in
turn drive customer acceptance(Harmsen et al,2000).

7. RESEARCH HYPOTHESES AND
THE MODEL
•
•
•
•
•
•
•
•
•
The model explores the relationships between three components of market
orientation and firm innovativeness, and innovation performance.
H1.a) Collection and use of market information is positively and significantly
correlated with firm innovativeness.
H1.b) Collection and use of market information is positively correlated with
innovation performance
H2.a) Development of market-oriented strategy is positively associated with firm
innovativeness
H2.b) Development of market-oriented strategy is positively associated with
innovation performance
H3.a) Implementation of market-oriented strategy is positively correlated with firm
innovativeness
H3.b) Implementation of market-oriented strategy is positively correlated with
innovation performance
H4) Firm innovativeness is positively correlated with innovation performance
H5) Collection and use of market information, development of market-oriented
strategy and implementation of market-oriented strategy are correlated.

8. H1.a,
H2.a ,
H3.a
H5
H3.b
H1.b,
H2.b
H4

9. Data Collection & Sample Survey
Target population:
Executive Managers of Industrial firms
from Marmara Region.
Method:
Questionnaire based
Total sample:
55
Technique used to da
ta Analysis:
Gima Market oriented-Strategy scale
(1995)
Information (six questions), Development
(four questions), Implementation (three
questions).
Tool for Analysis
SPSS ( statistical tool for analysis).

10. PRACTICAL IMPLICATIONS AND CONCLUSIONS
•
•
•
•
Customers today are highly informed and more demanding than before.
Responsiveness to customer needs and changing market conditions become
important for the success of firms and calls for the introduction of new products and
services together with innovation capacity for a firm.
Findings suggest that market orientation can lead to firm innovativeness and
increase innovation performance as consistent with the findings of Baker and
Sinkula (1999), such that market orientation can lead to successful new product
development activity.
The study analyzes the effects of market orientation components on firm
innovativeness and innovation performance. Collection and use of market
information, development and implementation of market-oriented strategy are
found to be related to firm innovativeness. Collection and use of market
information and development of market-oriented strategy are found to be associated
with innovation performance. Furthermore, findings indicate that firm
innovativeness is related to innovation performance for the sample data. These
findings support the predicted relationships between market orientation and
innovation performance.
Three
dimensions
of
market
orientation,
market
intelligence
generation, development of market oriented strategy and implementation of market
oriented strategy are important for innovation performance. Moreover, the links
between market-orientation and innovation need to be extended by considering
other
variables
such
as
learning
orientation,
organizational
structure, entrepreneurship and performance.

11. THANK YOU.